You’re Ready To Sell – But is Your Business?
Proper preparation for the sale of your business is one of the most important things you can do. If you were selling your car, you’d probably vacuum the inside and wash and polish the outside in the hope of selling it faster, or getting a few hundred dollars more-or both. In a competitive business sales environment and a world of ever more savvy buyers, it’s more important than ever that you put a little “polish” on your business as well when it’s time to sell. Start by putting yourself in the shoes of a potential buyer and ask yourself, “What can I do to make this business more attractive?” You, the seller, are an important part in the overall marketing plan, and your role starts with cleaning up your business-both physically and financially. Remember, as a seller of a business, you are now a retailer in the business for sale market, and the buyer is your customer!!!
If you focus on the areas listed below, the chance of selling your business and getting the price you want will go up substantially.
A buyer has to understand the financial past and future potential of your company. This means you need to have up-to-date financial statements-income statement and balance sheet-on a monthly basis. They should clearly and accurately reflect the operations of the business. Try to minimize “extra” expenses and be sure all of your revenue is reflected. Consider having a bookkeeping service prepare your financial statements-it increases the quality of your information and the confidence buyers will have in that information.
First impressions count. Whether you run a high end retail store or an equipment rental yard, your facility needs to be clean and organized. Get rid of excessive clutter and old inventory. Make sure any signs are professional (not hand written!). Touch up paint, replace old carpets, replace broken glass, repair broken fixtures. Remember-you’re trying to tap a buyer’s emotions with dreams of achieving their goals of owning and running their own business. A great bottom line can lose a lot of value if everything else doesn’t stack up.
Evaluate your operations in light of the best way to run your business. Is there a point of sale system you always wanted but never purchased? Now might be the time if it will improve the ability to run the business and help your business appear up-to-date rather than over the hill. Be sure your employees are trained, have clean uniforms, etc. Document some of your basic procedures in a manual. This will create a sense of comfort for a buyer by helping them believe they can successfully run their new business.
Price & Terms
Realistic value expectations and flexibility with regard to the terms you are willing to accept helps prepare you for assessing offers and negotiating with buyers. A business valuation will help you achieve a successful sell by helping you understand exactly what it is you have to sell.
Seek a value that is justified for the opportunity your business represents, but be realistic in your expectations, or you’ll be sitting on it a year from now without achieving your goal of a successful exit. Operate and promote your company in a way that will deliver a favorable lifestyle to a potential purchaser, rather than just profits. Always try to view the business from the outside looking in-put yourself in the buyer’s shoes!